It's not possible to get a decent ROI with a cap rate <10%

[Nick Rose]

Ok, I suppose it is possible - I'm just hoping to get some experienced investors' take! I do have capital that I'd like to put to use in an apartment building in the roughly 400K-700K range, however I can't seem to make the numbers give me a decent ROI. This very well may be mission impossible. I've run some numbers on several market rate deals, and below is roughly what I've seen:

Purchase price - 700K

Cap rate = 8%

NOI = 56K

I'd need a loan and property management.

Property management ~7800/year

Loan (5%, 20 year amort, 20% down) = 44.3K/year

Cash flow = 56,000-7800-44,300 = $3,900/year

This assumes NO capital expenses and assumes the current owner's maintenance numbers are spot on.  

How is everyone making this work for them? Perhaps others are finding 11%+ cap rates in good areas?